Why Healthy Organisations Trump Smart Organisations
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Regardless of how smart an organisation is, business health trumps business intelligence every time. No matter how well a company performs in terms of the fundamentals of business- that is strategy, marketing, finance, and technology- without organisational health, they will fail to excel. It is the health of companies that take them from ‘good to great’.
The latest research into organisational health demonstrates the relationship between healthy organisations, and strong financial performance is inextricably linked.
In fact, the top quartile of publicly traded companies in McKinsey’s Organisational Health Index (OHI) deliver roughly three times the returns to shareholders as those in the bottom quartile.
In my last blog, I discussed the three biases leaders need to overcome to embrace the concept of organisational health.
Once teams have humbled themselves sufficiently, they can begin the work that is needed to build a company that is smart and healthy; the key to unlocking real business success.
The Four Disciplines Model
The Four Disciplines Model, developed by Patrick Lencioni and expounded in his book The Advantage, provides a framework that works to turn unhealthy companies into healthy ones. In doing so, it not only creates ‘a massive competitive advantage and improved bottom line, but it […] also make a real difference in the lives of the people who work there’.
The Four required disciplines are as follows.
Discipline 1: Build A Cohesive Leadership Team
An organisation cannot be healthy if the people who are in charge of piloting the ship are not behaviourally cohesive. Whether your business is a small start-up or a multi-national conglomerate, a lack of cohesion in the leadership team will have detrimental trickle-down effects. Lencioni describes it in the following way: ‘if an organisation is led by a team that is not behaviourally unified, there is no chance that it will become healthy’.
The importance of a cohesive leadership team is indisputable. Yet, few companies invest the time and energy required to build real cohesion amongst the people they are trusting to steer their ship to greatness. Creating a cohesive management group starts with overcoming the five dysfunctions of a team. This involves building trust, embracing conflict and accountability and honing in on results.
Discipline 2: Create Clarity
Along with the leadership team overcoming the five dysfunctions to behave cohesively, they must be aligned and committed to the organisation’s mission with real clarity.
To do this, leaders must ask themselves six questions and achieve intellectual agreement on the answers. This creates genuine clarity, contributing significantly to the organisation’s overall health.
The six questions are as follows:
1. Why do we exist?
2. How do we behave?
3. What do we do?
4. How will we succeed?
5. What is most important right now?
6. Who must do what?
Discipline 3: Communicate Clarity
Once a leadership group has taken the time to answer the above questions and align around a common purpose, they then need to communicate the answers to their team. To convey this clarity, leaders need to enthusiastically and clearly state the organisation’s vision, mission and values to their employees repeatedly, until everyone on board is working to steer the company in the desired direction.
Discipline 4: Reinforce Clarity
Finally, for an organisation to remain healthy over time, the leadership team should create systems that reinforce this clarity (the how and what and why of the business model) in every process that involves its people. This means the true mission of the company underpins every policy, program and activity undertaken by an organisation. Healthy organisations are led by cohesive leadership teams that drive these strategies, learn from past mistakes and have the foresight to anticipate potential problems before they get out of hand.
At Infinity HR, we work with organisations to develop strong leadership teams, creating smart, healthy organisations that deliver results. Contact Iolanda on 0400 489 743 or email iolanda@infinityhr.com.au to learn more today.